Abstract

An industry adage held that “there are two types of rental car companies: those that lose money and Enterprise.” The company that would become Enterprise Rent-A-Car was started in 1957 in St. Louis, Missouri, by Jack Taylor. Taylor set up Enterprise offices in neighborhoods rather than at airports because he believed that Americans would welcome a local option for renting cars when their own vehicles were being repaired.
In 2010 Enterprise had more than 6,000 rental locations in the United States and a fleet of 850,000 cars in service. Its parent, Enterprise Holdings (comprising Enterprise, National, and Alamo brands) accounted for nearly half of the car rental market and was more than twice the size of Hertz, the number two competitor.
Enterprise’s competitive advantage was the result of the combination of its practices in hiring, training, compensation, organization, customer service, IT, and fleet management, among others.

Learning Objectives

Apply the concepts of value creation and value capture Understand the interaction of internal and external strategies in creating competitive advantage Understand the difference between market-level and firm-level demand elasticity Understand economies of scale and network externalities Determine the applicability of skills and resources to new markets